Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2001 ONFSCDRS 79

Appeal P01-00021

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ALLSTATE INSURANCE COMPANY OF CANADA

Appellant

and

FRANK TOROK

Respondent

Before:

Nancy Makepeace, Director’s Delegate

Counsel:

Ian D. Kirby for Allstate

Eric D. Zeldin for Mr. Torok

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

Allstate’s appeal of the arbitration decision dated April 4, 2001 is rejected pursuant to Rule 46.2 of the Dispute Resolution Practice Code - Third Edition (April 15, 1997).

May 29, 2001

Nancy Makepeace

Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

The issue is whether Allstate Insurance Company of Canada (“Allstate”) should be allowed to appeal the arbitrator’s preliminary issue decision, dated April 4, 2001. At the arbitration hearing, Allstate submitted that it was entitled to reduce Mr. Torok’s weekly benefits on account of collateral benefits that were available to him, though not received. The Arbitrator found that collateral benefits were not available.

The hearing on the remaining issue of Mr. Torok’s entitlement to weekly benefits is scheduled for August 13-16, 2001.

Mr. Torok submits that Allstate’s appeal of the arbitrator’s preliminary issue decision should be rejected pursuant to Rule 46.2 of the Dispute Resolution Practice Code - Third Edition (April 15, 1997), which states:

A party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute in the arbitration have been finally decided, unless the Director [or his Delegate] orders otherwise.

II. BACKGROUND

Mr. Torok was injured in motor vehicle accidents on February 26, 1992, August 26, 1992 and August 22, 1995. He applied for statutory accident benefits from Allstate under the SABS-1990,¹ which applies to the first two accidents, and the SABS-1995, which applies to the third.² Allstate paid weekly benefits of $767.50 per week until September 1, 1995, when benefits were reduced to $185 per week. Allstate terminated Mr. Torok’s weekly benefits on March 25, 1996.

Mr. Torok applied for mediation, followed by arbitration. He claims ongoing weekly benefits of $767.50 per week. As well as disputing that claim, Allstate submits that collateral disability benefits were available to Mr. Torok through Maritime Life, which provided a group disability policy to Mr. Torok’s former employer.³ Allstate seeks repayment of benefits overpaid pursuant to subsection 12(3) of the SABS-1990 and subsection 70(4) of the SABS-1995.

Although all the issues in dispute were originally scheduled to be heard together, the parties agreed, shortly before the hearing, that the collateral benefits issue should be decided as a preliminary issue. The arbitrator agreed. The hearing of the preliminary issue took place over four days in October 2000, and written submissions were filed over the next few months. The arbitrator heard oral evidence from Mr. Torok, Ms. Sylvie Clarke, a human resources officer with Mr. Torok’s former employer, and Ms. Susan Tombs, an employee of Maritime Life. She accepted Ms. Tombs’ evidence that Maritime Life dismissed Mr. Torok’s claim because it was out of time. She also implicitly accepted Mr. Torok’s evidence that he had not applied earlier because he did not know what benefits might be available to him. She found:

there is ample evidence to show that starting from shortly after the first accident, Mr. Torok co-operated fully with Allstate by advising Allstate that he had medical insurance coverage and disability coverage, which he understood to be one week of sick leave credits; by providing Employer’s Confirmation of Income forms; and by signing several authorizations for Allstate to obtain any information it needed from his employer regarding the issue of whether he had collateral benefits.

The arbitrator found there was “no indication that Mr. Torok made a tactical decision not to apply for benefits from Maritime Life.” Accordingly, she concluded that collateral benefits were not “available” to Mr. Torok because he applied beyond the limitation period.

III. ANALYSIS AND FINDINGS

The purpose of Rule 46.2 is to facilitate the most cost-effective resolution of disputes by minimizing the time and money spent on procedural or collateral matters. The decision whether to hear an appeal of a preliminary order is discretionary. As Delegate Naylor stated in General Accident and Glynn, the over-arching principle guiding the exercise of the discretion is that the rule “should be broadly interpreted to produce the quickest, most just and least expensive resolution of the dispute.”⁴ The criteria to be considered include the apparent strength of the appeal, the importance or novelty of the issue raised, and whether rejecting the appeal or hearing it will prejudice either party.⁵

Allstate submits that the preliminary issue appeal should be permitted to go forward because if it is successful, no benefits are owed, no matter what the arbitrator’s decision following the entitlement hearing. In Allstate’s view, the preliminary issue appeal is more straightforward than the entitlement hearing will be, considering that Mr. Torok has been injured in three accidents under two statutory benefit schemes. If Allstate’s appeal is successful, the four-day entitlement hearing will be avoided. Allstate submits that hearing the appeal need not necessitate an adjournment of the entitlement hearing, considering that transcripts are already available. If an adjournment is necessary, Allstate’s counsel will be flexible in coordinating a new date for the hearing.

Mr. Torok submits that the appeal should be rejected. For the following reasons, I agree.

Although Allstate’s appeal is framed in terms of error of law, the crux of the appeal is an allegation that the arbitrator came to the wrong conclusion in finding that collateral benefits were not available to Mr. Torok. This is evident from Allstate’s reliance on the transcript of the arbitration hearing. In any event, Allstate does not identify any specific factual error in the arbitrator’s decision, apart from disagreeing with her conclusion. The arbitrator relied on two arbitration decisions that support her interpretation of “available.”⁶ Allstate did not offer any contrary authorities. On the face of it, the strength of the appeal is not compelling.

Another problem for Allstate is that Mr. Torok does not agree that a successful appeal of the preliminary issue decision would wipe out any weekly benefits to which he might be entitled. He submits that his collateral benefits from Maritime Life would total $1,320 per month; Allstate submits his entitlement would be $2,000 per month. The arbitrator did not make a finding on this point because she found no benefits were available to Mr. Torok. This is a factual question.

The parties also disagree about whether Mr. Torok would qualify for benefits under the Maritime Life policy, if his application had been made in time. The policy sets out a “total disability for any occupation” test. At the arbitration hearing, Allstate argued that the courts have given similarly worded tests “an expansive interpretation . . . so as to conform to the wording in the Schedule.” Mr. Torok argued that the Schedule sets out an easier eligibility test; he must only establish that he has “a substantial inability” to perform the essential tasks of his pre-accident employment as a result of the accident. Although the arbitrator did not have to decide this point, having concluded that benefits were unavailable because of Mr. Torok’s delay in applying, she stated that she was not persuaded of Allstate’s reading of the Maritime Life test.

In his submissions in response to Allstate’s appeal, Mr. Torok states:

As we had pointed out in our submissions prior to the hearing, in order for [the arbitrator] to come to a decision as to whether Mr. Torok would qualify for benefits under the Maritime Life test, she would have to enter into an in-depth examination of the evidence with respect to Mr. Torok’s disability. (During the hearing, no oral testimony was given with respect to the level of Mr. Torok’s disability, but on agreement the parties did file all of the medical documentation as exhibits.)

To the extent there remains an issue whether Mr. Torok qualifies for Maritime Life benefits, it is a factual question.

This is not, then, a case where a preliminary issue appeal on a discrete issue is likely to obviate the need for an entitlement hearing. Moreover, hearing the appeal is likely to necessitate an adjournment of the hearing currently scheduled for August 2001. This matter has already been prolonged. The Report of Mediator is dated March 20, 1996. Mr. Torok applied for arbitration in September 1997. The hearing was initially scheduled for June 1999, but it was adjourned twice, on consent, because of delayed third-party productions. The entitlement hearing was adjourned again when it was decided to split the issues. It is not clear whether the parties reached any agreement at that time as to whether an appeal of the preliminary issue decision would be appropriate. In hindsight, it might have been more cost-effective to hear all the issues together.

The arbitrator’s preliminary decision did not finally dispose of Allstate’s rights and did not include an order for the payment of benefits. Accordingly, the prejudice to Allstate in rejecting the preliminary issue appeal is limited to the risk of incurring the cost of an unnecessary entitlement hearing. On the other hand, the prejudice to Mr. Torok is the more immediate cost and delay involved in a preliminary issue appeal. For the reasons given, I find that the fairest and most cost-effective way of resolving this dispute is to proceed to the entitlement hearing without further delay. Accordingly, the appeal is rejected pursuant to Rule 46.2. Because of the overlap between the issues, the entitlement hearing should be heard by the arbitrator who decided the preliminary issue, if possible.